Grocery industry finds new room for organics on its shelves

October 2, 1996
From Correspondent Holly Firfer

ATLANTA (CNN) -- The 1960s were a time of peace, love and back-to-nature, which for many meant a move away from processed and packaged foods. The natural foods movement was born, making "back to the land" the offbeat signature of a new generation.

Thirty years later, the children of the '60s have grown up, and so has the natural food market. Once natural food was the sole domain of small specialty markets. Today, retail sales of natural foods are the fastest-growing segment of the grocery industry, accounting for 10 percent of the more than $300 billion in annual sales.

"The business has definitely changed through the '70s and most of the '80s, trying to eat as whole foods as possible," said A.C. Gallo, the president of Bread and Circus. "But the thing that we realized over the next few years is, there's a much wider group of the population coming here. A lot of people shopping here now are looking for good quality food."

His shops are more sophisticated than they would have been 30 years ago, and so are his customers. Bread and Circus Market has been a Boston tradition since the mid-1970s. Now, it's part of a conglomerate of natural food stores owned by the Whole Foods company.

"I shop here, because its better produce, and also I have children and they're natural things that don't have the preservatives that I think are healthier for them," said one shopper.

Another: "I think people are waking up and seeing you can grow food without putting chemicals on it."

Health food markets are appealing to more shoppers today, as consumers become more interested in pesticide-free, environmentally friendly foods.

"I think a lot more people are interested in what they are eating, and even from an environmental standpoint, how things like environmental agriculture, and sustainable agriculture are actually maybe a better alternative for our environment," said Gallo.

Health issues are not the only factor driving the market; so are the beautiful produce displays typical of whole foods stores, and boredom with conventional grocery stores seem to be driving the market.

Whole Foods saw close to $500 million in revenues last year, so it expanded its 47-store franchise. Its purchase of rival chain Fresh Fields added another 22 stores and more than $200 million in sales.

And since big business seems to be sending the industry on a healthy course for the future, the nation's second largest natural food store chain isn't making peanuts either. On the opposite side of the country, California's Wild Oats Market is expanding as well, buying up Colorado's Alfalfa stores.

Their success has come despite the healthy price tag associated with organically-grown products, They can cost 20 percent more on the average than non-organic products. But many shoppers are willing to pay the price.

"I have to pay a little bit more, but I know the quality is first-rate, and I am willing to go for that," said one.

The more consumer demand for this new generation of natural food stores grows, so does the competition. And with that comes higher quality, better variety, and more organic.